##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION







Form 10-K


(Mark One)


x


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2004


OR


o


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934


For the transition period
from                to                .


Commission File Number 1-2700


El Paso Natural Gas Company




|                                                                                                      |  |                    
|----------------------------------------------------------------------------------------------------- |  | -------------------
|Delaware                                                                                              |  | 74-0608280         
|(State or Other Jurisdiction of                                                                       |  | (I.R.S. Employer   
|Incorporation or Organization)                                                                        |  | Identification No.)
|El Paso Building
    1001 Louisiana Street
    Houston, Texas(Address of Principal Executive Offices) |  | 77002(Zip Code)    

Telephone Number: (713) 420-2600


Securities registered pursuant to Section 12(b) of
the Act: None


Securities registered pursuant to Section 12(g) of the
Act: None




þ o


þ


o þ


State the aggregate market
value of the voting stock held by non-affiliates of the
registrant: None


Indicate the number of shares
outstanding of each of the registrants classes of common
stock, as of the latest practicable date.





EL PASO NATURAL GAS
COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION I(1)(a)
AND (b) TO FORM 10-K AND IS THEREFORE FILING THIS REPORT
WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH
INSTRUCTION.


Documents Incorporated by Reference: None










---










EL PASO NATURAL GAS COMPANY


TABLE OF CONTENTS


|                                             |  |                                                                                                                                                    |  |      |    | 
|-------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                             |  | Caption                                                                                                                                            |  | Page |   
|                                             |  |                                                                                                                                                    |  |      |   
|PART I                                      
|Item 1.                                      |  | Business                                                                                                                                           |  |      | 1  | 
|Item 2.                                      |  | Properties                                                                                                                                         |  |      | 4  | 
|Item 3.                                      |  | Legal Proceedings                                                                                                                                  |  |      | 4  | 
|Item 4.                                      |  | Submission of Matters to a Vote of Security Holders                                                                                                |  |      | *  | 
|PART II                                     
|Item 5.                                      |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities                               |  |      | 4  | 
|Item 6.                                      |  | Selected Financial Data                                                                                                                            |  |      | *  | 
|Item 7.                                      |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                                          |  |      | 5  | 
|                                             |  | Risk Factors and Cautionary Statement for
    Purposes of the Safe Harbor Provisions
    of the Private Securities Litigation Reform Act of 1995 |  |      | 10 | 
|Item 7A.                                     |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                                     |  |      | 15 | 
|Item 8.                                      |  | Financial Statements and Supplementary
    Data                                                                                                    |  |      | 16 | 
|Item 9.                                      |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                                                           |  |      | 41 | 
|Item 9A.                                     |  | Controls and Procedures                                                                                                                            |  |      | 41 | 
|Item 9B.                                     |  | Other Information                                                                                                                                  |  |      | 42 | 
|PART III                                    
|Item 10.                                     |  | Directors and Executive Officers of the Registrant                                                                                                 |  |      | *  | 
|Item 11.                                     |  | Executive Compensation                                                                                                                             |  |      | *  | 
|Item 12.                                     |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters                                                 |  |      | *  | 
|Item 13.                                     |  | Certain Relationships and Related Transactions                                                                                                     |  |      | *  | 
|Item 14.                                     |  | Principal Accountant Fees and Services                                                                                                             |  |      | 42 | 
|PART IV                                     
|Item 15.                                     |  | Exhibits and Financial Statement
    Schedules                                                                                                     |  |      | 43 | 
|                                             |  | Signatures                                                                                                                                         |  |      | 47 | 
|Indenture - dated January 1, 1992           
|Indenture dated November 13, 1996           
|Certification of CEO pursuant to Section 302
|Certification of CFO pursuant to Section 302
|Certification of CEO pursuant to Section 906
|Certification of CFO pursuant to Section 906








|  |                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | We have not included a response to this item in this document
    since no response is required pursuant to the reduced disclosure
    format permitted by General Instruction I to Form 10-K.



|     |  |                                 |  |      |  |                     
|---- |  | ------------------------------- |  | ---- |  | --------------------
|/d   |  | = per day                       |  | MMcf |  | = million cubic feet
|BBtu |  | = billion British thermal units |  | MDth |  | = thousand dekatherm
|Bcf  |  | = billion cubic feet            |  |      |  |                     







i



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PART I





ITEM 1. BUSINESS


General




The EPNG system.


The Mojave system.


Regulatory Environment
























1



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Markets and Competition










2



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|         |  |                                                                    |  |                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                           
|-------- |  | ------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Pipeline |  |                                                                    |  |                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                           
|System   |  | Customer Information                                               |  | Contract Information                                                                                                             |  | Competition                                                                                                                                                                                                                                                                                                               
|        
|EPNG     |  | Approximately 155 firm and interruptible transportation customers  |  | Approximately 213 firm transportation contracts
    Weighted average remaining contract term: approximately
    five years(1)(2) |  | EPNG faces competition in the West and Southwest from other
    existing pipelines, California storage facilities and new
    proposed pipelines and liquefied natural gas (LNG) projects as
    well as alternative energy sources that generate electricity
    such as hydroelectric power, nuclear, coal and fuel oil.
|         |  | Major Customer:
    Southern California
    Gas  Company(SoCal)(2) |  |                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                           
|         |  | (475 BBtu/d)                                                       |  | Contract term expires in 2006.                                                                                                   |  |                                                                                                                                                                                                                                                                                                                           
|         |  | (82 BBtu/d)                                                        |  | Contract terms expiring 2005 and 2007.                                                                                           |  |                                                                                                                                                                                                                                                                                                                           
|         |  | 768 BBtu/d                                                         |  | Contract term expires 2009-2011.                                                                                                 |  |                                                                                                                                                                                                                                                                                                                           
|        
|Mojave   |  | Approximately 14 firm and interruptible transportation customers   |  | Approximately nine firm transportation contracts
    Weighted average remaining contract term: approximately
    two years(3)    |  | Mojave faces competition from other existing pipelines and newly
    proposed pipeline and LNG projects as well as alternative energy
    sources that generate electricity such as hydroelectric power,
    nuclear, coal and fuel oil.                                                                                  
|         |  | Major Customers:                                                   |  |                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                           
|         |  | Texaco Natural Gas Inc.  (185 BBtu/d)                              |  | Contract term expires in 2007.                                                                                                   |  |                                                                                                                                                                                                                                                                                                                           
|         |  | Burlington Resources  Trading
    Inc.  (76 BBtu/d)                |  | Contract term expires in 2007.                                                                                                   |  |                                                                                                                                                                                                                                                                                                                           
|         |  | Los Angeles Department of  Water and
    Power  (50 BBtu/d)        |  | Contract term expires in 2007.                                                                                                   |  |                                                                                                                                                                                                                                                                                                                           






|    |                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Approximately 1,564 MMcf/d currently under contract is
    subject to early termination in August 2006 provided customers
    give timely notice of an intent to terminate. If all of these
    rights were exercised, the weighted average remaining contract
    term would decrease to approximately three years.
|   
|(2) | Reflects the impact of an agreement we entered into, subject to
    FERC approval, to extend 750 MMcf/d, effective
    September 1, 2006 for terms of three to five years.                                                                                                                                          
|   
|(3) | Subject to FERC approval of EPNGs Line 1903 project (Cadiz
    to Ehrenberg), EPNG will acquire approximately 281 BBtu/d
    of Mojave capacity to fulfill its long term obligations under
    the proposed project.                                                                                               

Environmental




Employees




3



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ITEM 2. PROPERTIES









ITEM 3. LEGAL PROCEEDINGS




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS







PART II







|         |                                                                                                                 
|-------- | ----------------------------------------------------------------------------------------------------------------
|ITEM  5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





ITEM 6. SELECTED FINANCIAL DATA




4



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS



Overview








|                |  |        |       |                  |                     |  |    | 
|--------------- |  | ------ | ----- | ---------------- | ------------------- |  | -- | 
|                |  |        |       | Percent of Total |                    
|                |  | MDth/d |       |                  | Contracted Capacity | 
|                |  |        |       |                  |                     | 
|2005            |  |        | 251   |                  |                     |  | 4  | 
|2006            |  |        | 2,658 |                  |                     |  | 46 | 
|2007            |  |        | 1,464 |                  |                     |  | 25 | 
|2008 and beyond |  |        | 1,466 |                  |                     |  | 25 | 

5



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Results of Operations






|                                |                  |                      |       |     |      |   |       |     | 
|------------------------------- | ---------------- | -------------------- | ----- | --- | ---- | - | ----- | --- | 
|                                |                  | 2004                 |       |     | 2003 |  
|                                |                  |                      |       |     |      |  
|                                |                  | (In millions, except |      
|                                |                  | volume amounts)      |      
|Operating revenues              |                  | $                    | 508   |     |      | $ | 526   |    
|Operating expenses              |                  |                      | (266  | )   |      |   | (385  | )  
|                                |                  |                      |       |     |      |  
|                                | Operating income |                      |       | 242 |      |   |       | 141 | 
|Other income, net               |                  |                      | 7     |     |      |   | 7     |    
|                                |                  |                      |       |     |      |  
|                                | EBIT             |                      |       | 249 |      |   |       | 148 | 
|Interest and debt expense       |                  |                      | (92   | )   |      |   | (90   | )  
|Affiliated interest income, net |                  |                      | 19    |     |      |   | 20    |    
|Income taxes                    |                  |                      | (58   | )   |      |   | (31   | )  
|                                |                  |                      |       |     |      |  
|                                | Net income       |                      | $     | 118 |      |   | $     | 47  | 
|                                |                  |                      |       |     |      |  
|Total throughput (BBtu/d)       |                  |                      | 4,235 |     |      |   | 4,066 |    
|                                |                  |                      |       |     |      |  



|                                                                  |                      |                         |     |     |         |      |     |        |  |   |     |     | 
|----------------------------------------------------------------- | -------------------- | ----------------------- | --- | --- | ------- | ---- | --- | ------ |  | - | --- | --- | 
|                                                                  |                      |                         |     |     |         | EBIT |    
|                                                                  |                      | Revenue                 |     |     | Expense |      |     | Impact | 
|                                                                  |                      |                         |     |     |         |      |     |        | 
|                                                                  |                      | Favorable/(Unfavorable) |    
|                                                                  |                      | (In millions)           |    
|Termination of customer risk sharing provision in December 2003   |                      | $                       | (24 | )   |         | $    |    |        |  | $ | (24 | )  
|Decrease in contributions in aid of construction in 2004          |                      |                         | (5  | )   |         |      |    |        |  |   | (5  | )  
|Gas not used in operations                                        |                      |                         | 15  |     |         |      | 2   |        |  |   | 17  |    
|Western Energy Settlement in 2003                                 |                      |                         |    |     |         |      | 140 |        |  |   | 140 |    
|Impact of lower power purchase costs in 2003                      |                      |                         |    |     |         |      | (4  | )      |  |   | (4  | )  
|Higher allocation of overhead and shared service costs            |                      |                         |    |     |         |      | (9  | )      |  |   | (9  | )  
|Higher depreciation resulting from increase in depreciable assets |                      |                         |    |     |         |      | (6  | )      |  |   | (6  | )  
|Other                                                             |                      |                         | (4  | )   |         |      | (4  | )      |  |   | (8  | )  
|                                                                  |                      |                         |     |     |         |      |     |        | 
|                                                                  | Total impact on EBIT |                         | $   | (18 | )       |      | $   | 119    |  |   | $   | 101 | 
|                                                                  |                      |                         |     |     |         |      |     |        | 



Risk sharing provision.


Gas Not Used in Operations.


6



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Western Energy Settlement.


Expansions.




Recontracting.


Navajo Nation.


Regulatory Matters.


7



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Income Taxes


|                   |  |                   |    |   |      |   |    |  
|------------------ |  | ----------------- | -- | - | ---- | - | -- | -
|                   |  | Year Ended        |   
|                   |  | December 31,      |   
|                   |  |                   |   
|                   |  | 2004              |    |   | 2003 |  
|                   |  |                   |    |   |      |  
|                   |  | (In millions,     |   
|                   |  | except for rates) |   
|Income taxes       |  | $                 | 58 |   |      | $ | 31 |  
|Effective tax rate |  |                   | 33 | % |      |   | 40 | %









Liquidity




8



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Capital Expenditures




|                |       |               |     |     |      |   |     |     | 
|--------------- | ----- | ------------- | --- | --- | ---- | - | --- | --- | 
|                |       | 2004          |     |     | 2003 |  
|                |       |               |     |     |      |  
|                |       | (In millions) |    
|Maintenance     |       | $             | 107 |     |      | $ | 103 |    
|Expansion/Other |       |               | 41  |     |      |   | 122 |    
|                |       |               |     |     |      |  
|                | Total |               | $   | 148 |      |   | $   | 225 | 
|                |       |               |     |     |      |  



Commitments and Contingencies




New Accounting Pronouncements Issued But Not Yet Adopted




9



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RISK FACTORS AND CAUTIONARY STATEMENT FOR PURPOSES OF THE
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995






Risks Related to Our Business


Our success depends on factors beyond our control.






| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | service area competition;                                                                                                 
|
| |  | expiration and/or turn back of significant contracts;                                                                     
|
| |  | changes in regulation and actions of regulatory bodies;                                                                   
|
| |  | future weather conditions;                                                                                                
|
| |  | price competition;                                                                                                        
|
| |  | drilling activity and supply availability of natural gas;                                                                 
|
| |  | decreased availability of conventional gas supply sources and
    the availability and timing of other gas supply sources;
|
| |  | increased availability or popularity of alternative energy
    sources such as hydroelectric power;                       
|
| |  | increased cost of capital;                                                                                                
|
| |  | opposition to energy infrastructure development, especially in
    environmentally sensitive areas;                       
|
| |  | adverse general economic conditions;                                                                                      
|
| |  | expiration and/or renewal of existing interests in real property
    including real property on Native American lands, and
|
| |  | unfavorable movements in natural gas and liquids prices.                                                                  

10



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The revenues of our pipeline businesses are generated
under contracts that must be renegotiated periodically, some of
which are for a substantial portion of our firm transportation
capacity.










| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | competition by other pipelines, including the proposed
    construction by other companies of additional pipeline capacity
    or LNG terminals, such as those proposed in Baja California, in
    markets served by us;
|
| |  | changes in state regulation of local distribution companies,
    which may cause them to negotiate short-term contracts or turn
    back their capacity when their contracts expire;                                    
|
| |  | reduced demand and market conditions in the areas we serve;                                                                                                                                                             
|
| |  | the availability of alternative energy sources or gas supply
    points; and                                                                                                                                            
|
| |  | regulatory actions.                                                                                                                                                                                                     



Fluctuations in energy commodity prices could adversely
affect our business.






| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | regional, domestic and international supply and demand;                   
|
| |  | availability and adequacy of transportation facilities;                   
|
| |  | energy legislation;                                                       
|
| |  | federal and state taxes, if any, on the transportation of
    natural gas;
|
| |  | abundance of supplies of alternative energy sources; and                  
|
| |  | political unrest among oil-producing countries.                           

11



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The agencies that regulate us and our customers affect our
profitability.








Costs of environmental liabilities, regulations and
litigation could exceed our estimates.








| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the uncertainties in estimating clean up costs;                                                                                                              
|
| |  | the discovery of new sites or information;                                                                                                                   
|
| |  | the uncertainty in quantifying our liability under environmental
    laws that impose joint and several liability on all potentially
    responsible parties;
|
| |  | the nature of environmental laws and regulations; and                                                                                                        
|
| |  | potential changes in environmental laws and regulations,
    including changes in the interpretation or enforcement thereof.                                 



Our operations are subject to operational hazards and
uninsured risks.






Cost of litigation could exceed our estimates.




12



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Risks Related to Our Affiliation with El Paso




Our relationship with El Paso and its financial condition
subjects us to potential risks that are beyond our
control.










13



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We may be subject to a change of control under certain
circumstances.




A default under El Pasos $3 billion credit
agreement by any party could accelerate our future borrowings,
if any, under the credit agreement and our long-term debt, which
could adversely affect our liquidity position.






We could be substantively consolidated with El Paso
if El Paso were forced to seek protection from its
creditors in bankruptcy.




14



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We are an indirect subsidiary of El Paso.






| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | our payment of dividends;                                      
|
| |  | decisions on our financings and our capital raising activities;
|
| |  | mergers or other business combinations;                        
|
| |  | our acquisitions or dispositions of assets; and                
|
| |  | our participation in El Pasos cash management program.        






ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK




|             |                              |                                              |   |   |                   |   |   |       |     |   |            |       |  |         |   |       |            |  |   |       |  |  |   |       |  | 
|------------ | ---------------------------- | -------------------------------------------- | - | - | ----------------- | - | - | ----- | --- | - | ---------- | ----- |  | ------- | - | ----- | ---------- |  | - | ----- |  |  | - | ----- |  | 
|             |                              | December 31, 2004                            |   |   | December 31, 2003 |  
|             |                              |                                              |   |   |                   |  
|             |                              | Expected Fiscal Year of Maturity of Carrying |   |   |                  
|             |                              | Amounts                                      |   |   |                  
|             |                              |                                              |   |   | Carrying          |   |   |      
|             |                              | 2005                                         |   |   | Thereafter        |   |   | Total |     |   | Fair Value |       |  | Amounts |   |       | Fair Value | 
|             |                              |                                              |   |   |                   |   |   |       |     |   |            |       |  |         |   |       |            | 
|             |                              | (Dollars in millions)                        |  
|Liabilities: |                              |                                              |   |   |                   |   |   |       |     |   |            |       |  |         |   |       |            |  |   |       |  |  |   |      
|             | Short-term debt  fixed rate |                                              | $ | 7 |                   |   | $ |      |     |   | $          | 7     |  |         | $ | 7     |            |  | $ | 7     |  |  | $ | 7     | 
|             |                              | Average interest rate                        |   |   | 6.9               | % |   |       |    |   |            |       |  |         |   |       |            |  |   |       |  |  |   |       |  | 
|             | Long-term debt  fixed rate  |                                              |   |   |                   |   | $ | 1,110 |     |   | $          | 1,110 |  |         | $ | 1,240 |            |  | $ | 1,109 |  |  | $ | 1,132 | 
|             |                              | Average interest rate                        |   |   |                   |   |   |       | 8.1 | % |            |       |  |         |   |       |            |  |   |       |  |  |   |       |  | 

15



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


EL PASO NATURAL GAS COMPANY





CONSOLIDATED STATEMENTS OF INCOME


(In millions)


|                                  |                                          |                         |     |     |      |   |     |      |  |   |      |     | 
|--------------------------------- | ---------------------------------------- | ----------------------- | --- | --- | ---- | - | --- | ---- |  | - | ---- | --- | 
|                                  |                                          | Year Ended December 31, |    
|                                  |                                          |                         |    
|                                  |                                          | 2004                    |     |     | 2003 |   |     | 2002 | 
|                                  |                                          |                         |     |     |      |   |     |      | 
|Operating revenues                |                                          | $                       | 508 |     |      | $ | 526 |      |  | $ | 564  |    
|                                  |                                          |                         |     |     |      |   |     |      | 
|Operating expenses                |                                          |                         |     |     |      |   |     |      |  |   |      |    
|                                  | Operation and maintenance                |                         |     | 166 |      |   |     | 163  |  |   |      | 172 | 
|                                  | Western Energy Settlement                |                         |     |    |      |   |     | 127  |  |   |      | 412 | 
|                                  | Depreciation, depletion and amortization |                         |     | 72  |      |   |     | 66   |  |   |      | 63  | 
|                                  | Taxes, other than income taxes           |                         |     | 28  |      |   |     | 29   |  |   |      | 21  | 
|                                  |                                          |                         |     |     |      |   |     |      | 
|                                  |                                          |                         | 266 |     |      |   | 385 |      |  |   | 668  |    
|                                  |                                          |                         |     |     |      |   |     |      | 
|Operating income (loss)           |                                          |                         | 242 |     |      |   | 141 |      |  |   | (104 | )  
|Other income, net                 |                                          |                         | 7   |     |      |   | 7   |      |  |   |     |    
|Interest and debt expense         |                                          |                         | (92 | )   |      |   | (90 | )    |  |   | (72  | )  
|Affiliated interest income, net   |                                          |                         | 19  |     |      |   | 20  |      |  |   | 22   |    
|                                  |                                          |                         |     |     |      |   |     |      | 
|Income (loss) before income taxes |                                          |                         | 176 |     |      |   | 78  |      |  |   | (154 | )  
|Income taxes                      |                                          |                         | 58  |     |      |   | 31  |      |  |   | (55  | )  
|                                  |                                          |                         |     |     |      |   |     |      | 
|Net income (loss)                 |                                          | $                       | 118 |     |      | $ | 47  |      |  | $ | (99  | )  
|                                  |                                          |                         |     |     |      |   |     |      | 



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EL PASO NATURAL GAS COMPANY





CONSOLIDATED BALANCE SHEETS


(In millions, except share amounts)


|                                       |                                                                              |                                                    |                                            |       |      |       |       |       |    |       | 
|-------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------ | ----- | ---- | ----- | ----- | ----- | -- | ----- | 
|                                       |                                                                              | December 31,                                       |                                           
|                                       |                                                                              |                                                    |                                           
|                                       |                                                                              | 2004                                               |                                            |       | 2003 |      
|                                       |                                                                              |                                                    |                                            |       |      |      
|Current assets                         |                                                                              |                                                    |                                            |       |      |       |       |      
|                                       | Cash and cash equivalents                                                    |                                                    | $                                          | 1     |      |       | $     | 26    |   
|                                       | Accounts and notes receivable                                                |                                                    |                                            |       |      |       |       |       |   
|                                       |                                                                              | Customer, net of allowance of $18 in 2004 and 2003 |                                            |       | 73   |       |       |       | 71 |      
|                                       |                                                                              | Affiliates                                         |                                            |       | 38   |       |       |       | 4  |      
|                                       |                                                                              | Other                                              |                                            |       | 3    |       |       |       | 6  |      
|                                       | Taxes receivable                                                             |                                                    |                                            | 102   |      |       |       |      |   
|                                       | Materials and supplies                                                       |                                                    |                                            | 41    |      |       |       | 42    |   
|                                       | Deferred income taxes                                                        |                                                    |                                            | 27    |      |       |       | 206   |   
|                                       | Restricted cash                                                              |                                                    |                                            |      |      |       |       | 443   |   
|                                       | Other                                                                        |                                                    |                                            | 19    |      |       |       | 20    |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total current assets                       |       |      | 304   |       |       |    | 818   | 
|                                       |                                                                              |                                                    |                                            |       |      |      
|Property, plant and equipment, at cost |                                                                              |                                                    | 3,355                                      |       |      |       | 3,228 |      
|                                       | Less accumulated depreciation, depletion and amortization                    |                                                    |                                            | 1,222 |      |       |       | 1,187 |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total property, plant and equipment, net   |       |      | 2,133 |       |       |    | 2,041 | 
|Other assets                           |                                                                              |                                                    |                                            |       |      |       |       |      
|                                       | Notes receivable from affiliates                                             |                                                    |                                            | 702   |      |       |       | 779   |   
|                                       | Other                                                                        |                                                    |                                            | 86    |      |       |       | 86    |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | 788                                        |       |      |       | 865   |      
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total assets                               |       | $    | 3,225 |       |       | $  | 3,724 | 
|                                       |                                                                              |                                                    |                                            |       |      |      
|Current liabilities                    |                                                                              |                                                    |                                            |       |      |       |       |      
|                                       | Accounts payable                                                             |                                                    |                                            |       |      |       |       |       |   
|                                       |                                                                              | Trade                                              |                                            | $     | 36   |       |       | $     | 35 |      
|                                       |                                                                              | Affiliates                                         |                                            |       | 16   |       |       |       | 13 |      
|                                       |                                                                              | Other                                              |                                            |       | 4    |       |       |       | 5  |      
|                                       | Short-term borrowings                                                        |                                                    |                                            | 7     |      |       |       | 7     |   
|                                       | Accrued interest                                                             |                                                    |                                            | 25    |      |       |       | 25    |   
|                                       | Taxes payable                                                                |                                                    |                                            | 29    |      |       |       | 122   |   
|                                       | Contractual deposits                                                         |                                                    |                                            | 11    |      |       |       | 29    |   
|                                       | Western Energy Settlement                                                    |                                                    |                                            |      |      |       |       | 538   |   
|                                       | Other                                                                        |                                                    |                                            | 11    |      |       |       | 20    |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total current liabilities                  |       |      | 139   |       |       |    | 794   | 
|                                       |                                                                              |                                                    |                                            |       |      |      
|Long-term debt                         |                                                                              |                                                    | 1,110                                      |       |      |       | 1,109 |      
|                                       |                                                                              |                                                    |                                            |       |      |      
|Other liabilities                      |                                                                              |                                                    |                                            |       |      |       |       |      
|                                       | Deferred income taxes                                                        |                                                    |                                            | 359   |      |       |       | 386   |   
|                                       | Other                                                                        |                                                    |                                            | 104   |      |       |       | 113   |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | 463                                        |       |      |       | 499   |      
|                                       |                                                                              |                                                    |                                            |       |      |      
|Commitments and contingencies          |                                                                              |                                                    |                                            |       |      |       |       |      
|Stockholders equity                   |                                                                              |                                                    |                                            |       |      |       |       |      
|                                       | Common stock, par value $1 per share; authorized and issued
    1,000 shares |                                                    |                                            |      |      |       |       |      |   
|                                       | Additional paid-in capital                                                   |                                                    |                                            | 1,267 |      |       |       | 1,194 |   
|                                       | Retained earnings                                                            |                                                    |                                            | 246   |      |       |       | 128   |   
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total stockholders equity                 |       |      | 1,513 |       |       |    | 1,322 | 
|                                       |                                                                              |                                                    |                                            |       |      |      
|                                       |                                                                              |                                                    | Total liabilities and stockholders equity |       | $    | 3,225 |       |       | $  | 3,724 | 
|                                       |                                                                              |                                                    |                                            |       |      |      



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EL PASO NATURAL GAS COMPANY





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |     |     |     |      |      |    |   |      |  
|--------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------- | ----------------------------------- | ----------- | --------------------------------------------------- | ---- | --- | ---- | --- | --- | --- | ---- | ---- | -- | - | ---- | -
|                                        |                                                                                      | Year Ended December 31,                  |                                    
|                                        |                                                                                      |                                          |                                    
|                                        |                                                                                      | 2004                                     |                                     |             | 2003                                                |      |     | 2002 |    
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|Cash flows from operating activities    |                                                                                      |                                          |                                     |             |                                                     |      |     |      |     |     |     |     
|Net income (loss)                       |                                                                                      | $                                        | 118                                 |             |                                                     | $    | 47  |      |     | $   | (99 | )   
|                                        | Adjustments to reconcile net income (loss) to net cash from
    operating activities |                                          |                                     |             |                                                     |      |     |      |     |     |     |      |     
|                                        |                                                                                      | Depreciation, depletion and amortization |                                     |             | 72                                                  |      |     |      | 66  |     |     |      | 63   |   
|                                        |                                                                                      | Deferred income taxes                    |                                     |             | 155                                                 |      |     |      | (12 | )   |     |      | (113 | ) 
|                                        |                                                                                      | Risk-sharing revenue                     |                                     |             |                                                    |      |     |      | (32 | )   |     |      | (32  | ) 
|                                        |                                                                                      | Western Energy Settlement                |                                     |             |                                                    |      |     |      | 117 |     |     |      | 412  |   
|                                        |                                                                                      | Other non-cash income items              |                                     |             |                                                    |      |     |      | (4  | )   |     |      | 13   |   
|                                        |                                                                                      | Asset and liabilities changes            |                                     |             |                                                     |      |     |      |     |     |     |      |      |   
|                                        |                                                                                      |                                          | Western Energy Settlement liability |             |                                                     | (538 | )   |      |     |    |     |      |      |   |  
|                                        |                                                                                      |                                          | Accounts and notes receivable       |             |                                                     | (5   | )   |      |     | 18  |     |      |      | (4 | )
|                                        |                                                                                      |                                          | Accounts payable                    |             |                                                     | 4    |     |      |     | (33 | )   |      |      | (4 | )
|                                        |                                                                                      |                                          | Taxes receivable                    |             |                                                     | (102 | )   |      |     |    |     |      |      |    |  
|                                        |                                                                                      |                                          | Taxes payable                       |             |                                                     | (93  | )   |      |     | (9  | )   |      |      | 24 |  
|                                        |                                                                                      |                                          | Other asset and liability changes   |             |                                                     |      |     |      |     |     |     |      |      |    |  
|                                        |                                                                                      |                                          |                                     | Assets      |                                                     |      |    |      |     |     | (4  | )    |      |    | 3 |     
|                                        |                                                                                      |                                          |                                     | Liabilities |                                                     |      | (47 | )    |     |     | 3   |      |      |    | 6 |     
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|                                        |                                                                                      |                                          |                                     |             | Net cash provided by (used in) operating activities |      |     | (436 | )   |     |     | 157  |      |    |   | 269  |  
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|Cash flows from investing activities    |                                                                                      |                                          |                                     |             |                                                     |      |     |      |     |     |     |     
|                                        | Additions to property, plant and equipment                                           |                                          |                                     | (148        | )                                                   |      |     | (225 | )   |     |     | (193 | )   
|                                        | Proceeds from the sale of assets                                                     |                                          |                                     | 1           |                                                     |      |     | 38   |     |     |     | 9    |     
|                                        | Net change in restricted cash                                                        |                                          |                                     | 443         |                                                     |      |     | (443 | )   |     |     |     |     
|                                        | Net change in affiliated advances                                                    |                                          |                                     | 49          |                                                     |      |     | 221  |     |     |     | 304  |     
|                                        | Other                                                                                |                                          |                                     | (7          | )                                                   |      |     |     |     |     |     |     |     
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|                                        |                                                                                      |                                          |                                     |             | Net cash provided by (used in) investing activities |      |     | 338  |     |     |     | (409 | )    |    |   | 120  |  
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|Cash flows from financing activities    |                                                                                      |                                          |                                     |             |                                                     |      |     |      |     |     |     |     
|                                        | Net borrowings (repayments) of commercial paper and other
    current debt           |                                          |                                     |            |                                                     |      |     | 7    |     |     |     | (439 | )   
|                                        | Payments to retire long-term debt                                                    |                                          |                                     |            |                                                     |      |     | (200 | )   |     |     | (215 | )   
|                                        | Capital contributions                                                                |                                          |                                     | 73          |                                                     |      |     | 121  |     |     |     |     |     
|                                        | Net proceeds from the issuance of long-term debt                                     |                                          |                                     |            |                                                     |      |     | 347  |     |     |     | 296  |     
|                                        | Dividends paid                                                                       |                                          |                                     |            |                                                     |      |     |     |     |     |     | (28  | )   
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|                                        |                                                                                      |                                          |                                     |             | Net cash provided by (used in) financing activities |      |     | 73   |     |     |     | 275  |      |    |   | (386 | )
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|Net change in cash and cash equivalents |                                                                                      |                                          | (25                                 | )           |                                                     |      | 23  |      |     |     | 3   |     
|Cash and cash equivalents               |                                                                                      |                                          |                                     |             |                                                     |      |     |      |     |     |     |     
|                                        | Beginning of period                                                                  |                                          |                                     | 26          |                                                     |      |     | 3    |     |     |     |     |     
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    
|                                        | End of period                                                                        |                                          | $                                   | 1           |                                                     |      | $   | 26   |     |     | $   | 3    |     
|                                        |                                                                                      |                                          |                                     |             |                                                     |      |     |      |    



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EL PASO NATURAL GAS COMPANY





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


(In millions, except share amounts)


|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     |     |   |   |       |     |  
|----------------- | --------------------------------------------- | --------- | --- | ---- | ------------ |  | ---------- | ------ |  | -------- | - | ----- | ------------- | - | ----- | ------ | - | - | --- | --- | - | - | ----- | --- | -
|                  |                                               | 8%        |     |      | Common stock |  | Additional |        |  |          |   | Total |              
|                  |                                               | Preferred |     |      |              |  | paid-in    |        |  | Retained |   |       | stockholders |  
|                  |                                               | stock     |     |      | Shares       |  |            | Amount |  | capital  |   |       | earnings      |   |       | equity |  
|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |  
|January 1, 2002   |                                               | $         | 350 |      |              |  | 1,000      |        |  | $        |  |       |               | $ | 714   |        |   | $ | 234 |     |   | $ | 1,298 |    
|                  | Net loss                                      |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | (99 | ) |   |       | (99 | )
|                  | Preferred stock dividends                     |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | (28 | ) |   |       | (28 | )
|                  | Allocated tax benefit of El Paso equity plans |           |     |      |              |  |            |        |  |          |   |       |               |   |       | 1      |   |   |     |     |   |   |       | 1   |  
|                  | Dividends                                     |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | (19 | ) |   |       | (19 | )
|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |  
|December 31, 2002 |                                               |           | 350 |      |              |  | 1,000      |        |  |          |  |       |               |   | 715   |        |   |   | 88  |     |   |   | 1,153 |    
|                  | Net income                                    |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | 47  |   |   |       | 47  |  
|                  | Preferred stock dividends                     |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | (7  | ) |   |       | (7  | )
|                  | Redemption of preferred stock                 |           |     | (350 | )            |  |            |        |  |          |   |       |               |   |       | 359    |   |   |     |     |   |   |       | 9   |  
|                  | Western Energy Settlement contribution        |           |     |      |              |  |            |        |  |          |   |       |               |   |       | 121    |   |   |     |     |   |   |       | 121 |  
|                  | Allocated tax expense of El Paso equity plans |           |     |      |              |  |            |        |  |          |   |       |               |   |       | (1     | ) |   |     |     |   |   |       | (1  | )
|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |  
|December 31, 2003 |                                               |           |    |      |              |  | 1,000      |        |  |          |  |       |               |   | 1,194 |        |   |   | 128 |     |   |   | 1,322 |    
|                  | Net income                                    |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |   |     | 118 |   |   |       | 118 |  
|                  | Western Energy Settlement contribution        |           |     |      |              |  |            |        |  |          |   |       |               |   |       | 73     |   |   |     |     |   |   |       | 73  |  
|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |  
|December 31, 2004 |                                               | $         |    |      |              |  | 1,000      |        |  | $        |  |       |               | $ | 1,267 |        |   | $ | 246 |     |   | $ | 1,513 |    
|                  |                                               |           |     |      |              |  |            |        |  |          |   |       |               |   |       |        |   |  



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EL PASO NATURAL GAS COMPANY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Summary of Significant Accounting Policies


Basis of Presentation and Principles of
Consolidation




Use of Estimates




Regulated Operations


Accounting for the Effects of Certain
Type of Regulation.


Cash and Cash Equivalents




Allowance for Doubtful Accounts




Materials and Supplies




Natural Gas Imbalances




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Property, Plant and Equipment














Asset Impairments


Accounting for
the Impairment or Disposal of Long-Lived Assets,


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Revenue Recognition




Environmental Costs and Other
Contingencies






Income Taxes






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2. Income Taxes




|         |         |                    |     |     |      |  |     |      |    |  |      |      |     |  
|-------- | ------- | ------------------ | --- | --- | ---- |  | --- | ---- | -- |  | ---- | ---- | --- | -
|         |         | 2004               |     |     | 2003 |  |     | 2002 |   
|         |         |                    |     |     |      |  |     |      |   
|         |         | (In millions)      |    
|Current  |         |                    |     |     |      |  |     |      |    |  |      |     
|         | Federal |                    | $   | (99 | )    |  | $   | 37   |    |  | $    | 52   |    
|         | State   |                    |     | 2   |      |  |     | 6    |    |  |      | 6    |    
|         |         |                    |     |     |      |  |     |      |   
|         |         |                    | (97 | )   |      |  | 43  |      |    |  | 58   |     
|         |         |                    |     |     |      |  |     |      |   
|Deferred |         |                    |     |     |      |  |     |      |    |  |      |     
|         | Federal |                    |     | 159 |      |  |     | (11  | )  |  |      | (105 | )  
|         | State   |                    |     | (4  | )    |  |     | (1   | )  |  |      | (8   | )  
|         |         |                    |     |     |      |  |     |      |   
|         |         |                    | 155 |     |      |  | (12 | )    |    |  | (113 | )   
|         |         |                    |     |     |      |  |     |      |   
|         |         | Total income taxes |     | $   | 58   |  |     | $    | 31 |  |      | $    | (55 | )
|         |         |                    |     |     |      |  |     |      |   



|                                                  |                                                               |               |    |    |      |   |    |      |  |   |     |    |  
|------------------------------------------------- | ------------------------------------------------------------- | ------------- | -- | -- | ---- | - | -- | ---- |  | - | --- | -- | -
|                                                  |                                                               | 2004          |    |    | 2003 |   |    | 2002 | 
|                                                  |                                                               |               |    |    |      |   |    |      | 
|                                                  |                                                               | (In millions) |   
|Income taxes at the statutory federal rate of 35% |                                                               | $             | 62 |    |      | $ | 27 |      |  | $ | (54 | ) 
|Increase (decrease)                               |                                                               |               |    |    |      |   |    |      |  |   |     |   
|                                                  | State income taxes, net of federal income tax effect          |               |    | 6  |      |   |    | 3    |  |   |     | (1 | )
|                                                  | State tax valuation allowance  Western Energy
    Settlement |               |    | (6 | )    |   |    |     |  |   |     |   |  
|                                                  | Deferred tax adjustments, including Mojave                    |               |    | (3 | )    |   |    |     |  |   |     |   |  
|                                                  | Other                                                         |               |    | (1 | )    |   |    | 1    |  |   |     |   |  
|                                                  |                                                               |               |    |    |      |   |    |      | 
|Income taxes                                      |                                                               | $             | 58 |    |      | $ | 31 |      |  | $ | (55 | ) 
|                                                  |                                                               |               |    |    |      |   |    |      | 
|Effective tax rate                                |                                                               |               | 33 | %  |      |   | 40 | %    |  |   | 36  | % 
|                                                  |                                                               |               |    |    |      |   |    |      | 



|                           |                                                         |                              |     |     |      |   |     |     |     | 
|-------------------------- | ------------------------------------------------------- | ---------------------------- | --- | --- | ---- | - | --- | --- | --- | 
|                           |                                                         | 2004                         |     |     | 2003 |  
|                           |                                                         |                              |     |     |      |  
|                           |                                                         | (In millions)                |    
|Deferred tax liabilities   |                                                         |                              |     |     |      |   |     |    
|                           | Property, plant and equipment                           |                              | $   | 389 |      |   | $   | 332 |    
|                           | Employee benefits and deferred compensation obligations |                              |     | 26  |      |   |     | 25  |    
|                           | Regulatory and other assets                             |                              |     | 73  |      |   |     | 89  |    
|                           |                                                         |                              |     |     |      |  
|                           |                                                         | Total deferred tax liability |     |     | 488  |   |     |     | 446 | 
|                           |                                                         |                              |     |     |      |  
|Deferred tax assets        |                                                         |                              |     |     |      |   |     |    
|                           | Western Energy Settlement                               |                              |     |    |      |   |     | 205 |    
|                           | U.S. net operating loss and tax credit carryovers       |                              |     | 69  |      |   |     | 17  |    
|                           | State net operating loss carryovers                     |                              |     | 21  |      |   |     |    |    
|                           | Other liabilities                                       |                              |     | 66  |      |   |     | 50  |    
|                           | Valuation allowance                                     |                              |     |    |      |   |     | (6  | )  
|                           |                                                         |                              |     |     |      |  
|                           |                                                         | Total deferred tax asset     |     |     | 156  |   |     |     | 266 | 
|                           |                                                         |                              |     |     |      |  
|Net deferred tax liability |                                                         | $                            | 332 |     |      | $ | 180 |    
|                           |                                                         |                              |     |     |      |  



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|                                       |  |               |     |  |                 |  |           | 
|-------------------------------------- |  | ------------- | --- |  | --------------- |  | --------- | 
|Carryover                              |  | Amount        |     |  | Expiration Date | 
|                                       |  |               |     |  |                 | 
|                                       |  | (In millions) |     |  |                
|U.S. federal net operating
    loss(1) |  | $             | 148 |  |                 |  | 2019-2024 | 
|State net operating loss               |  |               | 290 |  |                 |  | 2009      | 






|    |                                                                         
|--- | ------------------------------------------------------------------------
|(1) | $1 million of this amount expires in 2019, and
    $147 million in 2024.





3. Financial Instruments




|                                     |                       |               |   |       |            |  |          |        |  |  |            |       |  |  |   |       | 
|------------------------------------ | --------------------- | ------------- | - | ----- | ---------- |  | -------- | ------ |  |  | ---------- | ----- |  |  | - | ----- | 
|                                     |                       | 2004          |   |       | 2003       | 
|                                     |                       |               |   |       |            | 
|                                     |                       | Carrying      |   |       |            |  | Carrying |        |  | 
|                                     |                       | Amount        |   |       | Fair Value |  |          | Amount |  |  | Fair Value |      
|                                     |                       |               |   |       |            |  |          |        |  |  |            |      
|                                     |                       | (In millions) |  
|Balance sheet financial instruments: |                       |               |   |       |            |  |          |        |  |  |            |       |  |  |   |      
|                                     | Long-term
    debt(1) |               | $ | 1,110 |            |  | $        | 1,240  |  |  | $          | 1,109 |  |  | $ | 1,132 | 






| |     |                                                                                                                                
| | --- | -------------------------------------------------------------------------------------------------------------------------------
| | (1) | We estimated the fair value of debt with fixed interest rates
    based on quoted market prices for the same or similar issues.



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4. Regulatory Assets and Liabilities




|                                   |                                                                     |                                                 |   |    |      |  |   |    |    | 
|---------------------------------- | ------------------------------------------------------------------- | ----------------------------------------------- | - | -- | ---- |  | - | -- | -- | 
|Description                        |                                                                     | 2004                                            |   |    | 2003 | 
|                                   |                                                                     |                                                 |   |    |      | 
|                                   |                                                                     | (In millions)                                   |  
|Non-current regulatory assets      |                                                                     |                                                 |   |    |      |  |   |   
|                                   | Unamortized loss on reacquired debt                                 |                                                 | $ | 21 |      |  | $ | 23 |   
|                                   | Deferred taxes on capitalized funds used during
    construction(1) |                                                 |   | 17 |      |  |   | 15 |   
|                                   | Postretirement
    benefits(1)                                      |                                                 |   | 11 |      |  |   | 11 |   
|                                   | Under-collected state income
    taxes(1)                           |                                                 |   | 7  |      |  |   | 4  |   
|                                   |                                                                     |                                                 |   |    |      | 
|                                   |                                                                     | Total non-current regulatory
    assets(2)      |   | $  | 56   |  |   | $  | 53 | 
|                                   |                                                                     |                                                 |   |    |      | 
|Non-current regulatory liabilities |                                                                     |                                                 |   |    |      |  |   |   
|                                   | Property and plant depreciation                                     |                                                 | $ | 35 |      |  | $ | 28 |   
|                                   | Excess deferred federal income taxes                                |                                                 |   | 3  |      |  |   | 4  |   
|                                   |                                                                     |                                                 |   |    |      | 
|                                   |                                                                     | Total non-current regulatory
    liabilities(2) |   | $  | 38   |  |   | $  | 32 | 
|                                   |                                                                     |                                                 |   |    |      | 






| |     |                                                                                           
| | --- | ------------------------------------------------------------------------------------------
| | (1) | These amounts are not included in our rate base on which we earn
    a current return.    
|
| | (2) | Amounts are included as other non-current assets and liabilities
    in our balance sheet.

5. Debt and Other Credit Facilities




|                           |                            |                      |       |     |       |  |       |     |       | 
|-------------------------- | -------------------------- | -------------------- | ----- | --- | ----- |  | ----- | --- | ----- | 
|                           |                            | 2004                 |       |     | 2003  | 
|                           |                            |                      |       |     |       | 
|                           |                            | (In millions)        |      
|                           | 7.625% Notes due 2010      |                      | $     | 355 |       |  | $     | 355 |      
|                           | 8.625% Debentures due 2022 |                      |       | 260 |       |  |       | 260 |      
|                           | 7.50% Debentures due 2026  |                      |       | 200 |       |  |       | 200 |      
|                           | 8.375% Notes due 2032      |                      |       | 300 |       |  |       | 300 |      
|                           |                            |                      |       |     |       | 
|                           |                            |                      | 1,115 |     |       |  | 1,115 |    
|Less: Unamortized discount |                            |                      | 5     |     |       |  | 6     |    
|                           |                            |                      |       |     |       | 
|                           |                            | Total long-term debt |       | $   | 1,110 |  |       | $   | 1,109 | 
|                           |                            |                      |       |     |       | 







| |                  
| | -----------------
| | Letters of Credit





| |                  
| | -----------------
| | Credit Facilities



25



---



##### Table of Contents









6. Commitments and Contingencies


Legal Proceedings


Western Energy Settlement.






26



---



##### Table of Contents





Sierra Pacific Resources and Nevada Power Company v.
El Paso et al.


IMC Chemicals v. E1 Paso Marketing (EPM), et al.


State of Arizona v. El Paso et. al.




| |   |                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Contribute $3 million to the Arizona Low Income Energy
    Assistance Program to assist low-income Arizonans with high
    energy costs;                                                                                                                                                                      
|
| |  | Commission a long-term, comprehensive study on Energy for
    Arizona in the
    21st
    Century;                                                                                                                                                                                                          
|
| |  | Fund an Emergency Preparedness/Consequence Management
    Initiative with appropriate State of Arizona agencies and
    officials. This Initiative will include a program of training,
    exercises, simulations and coordination designed to address
    emergency situations within the State of Arizona;
|
| |  | Invest $40 million for pipeline enhancements benefiting the
    Phoenix/East Phoenix area;                                                                                                                                                                                                                    
|
| |  | Accelerate $30 million of already-planned expenditures
    associated with EPNGs Pipeline Integrity
    Program;                                                                                                                                                                                           
|
| |  | Develop a $3 million water conservation initiative for our
    Tucson Station; and                                                                                                                                                                                                                            
|
| |  | Pay $2 million to the State of Arizona.                                                                                                                                                                                                                                                                       



Phelps Dodge vs. EPNG.


Shareholder Class Action Suit. Marilyn Clark v.
Byron Allumbaugh, David A. Arledge,


27



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##### Table of Contents



John M. Bissell, Juan Carlos Braniff, James F.
Gibbons, Anthony W. Hall, Ronald L. Kuehn,
J. Carleton MacNeil, Thomas McDade, Malcolm Wallop, William
Wise, Joe B. Wyatt, El Paso Natural Gas Company and
El Paso Merchant Energy Company


Carlsbad.






Baldonado et al. vs. EPNG Baldonado


Grynberg. In re: Natural
Gas Royalties Qui Tam Litigation


Will Price (formerly Quinque). Will Price, et al. v. Gas
Pipelines and Their Predecessors, et al.,


28



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##### Table of Contents





Bank of America. Bank of America, et al. v. El Paso Natural Gas Company, et
al., Deane W. Moore, et al. v. Burlington Northern,
Inc., et al., Altheide
v. Meridian, Bank of America, et al. v. El
Paso Natural Gas and Burlington Resources Oil and Gas Company, El Paso
Natural Gas Company v. Burlington Resources, Inc. and Burlington
Resources Oil and Gas Company, L.P.






Environmental Matters




29



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##### Table of Contents





|                                                 |  |   |    |  
|------------------------------------------------ |  | - | -- | -
|Balance at January 1, 2004                       |  | $ | 28 |  
|Additions/adjustments for remediation activities |  |   | 7  |  
|Payments for remediation activities              |  |   | (3 | )
|                                                 |  |   |   
|Balance at December 31, 2004                     |  | $ | 32 |  
|                                                 |  |   |   



CERCLA Matters.


New Mexico Ambient Air Quality Standards.


State of Arizona Chromium Review.




30



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##### Table of Contents



Rates and Regulatory Matters


CPUC Complaint Proceeding.


Systemwide Capacity Allocation Proceeding.




Rate Settlement.


Rate Case.


FERC Order 2004 Audit.


CPUCs OIR Proceeding.


31



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##### Table of Contents





Accounting for Pipeline Integrity Costs.


Inquiry Regarding Income Tax Allowances.


Selective Discounting Notice of Inquiry.






| |              
| | -------------
| | Other Matters

Enron Bankruptcy.


32



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##### Table of Contents







Capital Commitments




Operating Leases




|             |       |                     |    |    | 
|------------ | ----- | ------------------- | -- | -- | 
|Year Ended   |       |                    
|December 31, |       | Operating Leases(1) |   
|             |       |                     |   
|             |       | (In millions)       |   
|2005         |       | $                   | 14 |   
|2006         |       |                     | 15 |   
|2007         |       |                     | 6  |   
|             |       |                     |   
|             | Total |                     | $  | 35 | 
|             |       |                     |   






|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These amounts exclude our proportional share of minimum annual
    rental commitments paid by El Paso, which are allocated to
    us through an overhead allocation.





Guarantees




7. Retirement Benefits


Pension and Retirement Benefits




33



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##### Table of Contents







Other Postretirement Benefits




Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003.




|                                 |                                                     |               |   |     |      |  |   |     |  
|-------------------------------- | --------------------------------------------------- | ------------- | - | --- | ---- |  | - | --- | -
|                                 |                                                     | 2004          |   |     | 2003 | 
|                                 |                                                     |               |   |     |      | 
|                                 |                                                     | (In millions) |  
|Change in benefit obligation:    |                                                     |               |   |     |      |  |   |    
|                                 | Projected benefit obligation at beginning of period |               | $ | 107 |      |  | $ | 100 |  
|                                 | Interest cost                                       |               |   | 6   |      |  |   | 7   |  
|                                 | Actuarial (gain) loss                               |               |   | (22 | )    |  |   | 9   |  
|                                 | Benefits paid                                       |               |   | (6  | )    |  |   | (9  | )
|                                 |                                                     |               |   |     |      | 
|                                 | Projected benefit obligation at end of period       |               | $ | 85  |      |  | $ | 107 |  
|                                 |                                                     |               |   |     |      | 
|Change in plan assets:           |                                                     |               |   |     |      |  |   |    
|                                 | Fair value of plan assets at beginning period       |               | $ | 70  |      |  | $ | 60  |  
|                                 | Actual return on plan assets                        |               |   | 2   |      |  |   | 8   |  
|                                 | Employer contributions                              |               |   | 11  |      |  |   | 11  |  
|                                 | Benefits paid                                       |               |   | (6  | )    |  |   | (9  | )
|                                 |                                                     |               |   |     |      | 
|                                 | Fair value of plan assets at end of period          |               | $ | 77  |      |  | $ | 70  |  
|                                 |                                                     |               |   |     |      | 
|Reconciliation of funded status: |                                                     |               |   |     |      |  |   |    
|                                 | Under funded status as of September 30              |               | $ | (8  | )    |  | $ | (37 | )
|                                 | Fourth quarter contributions                        |               |   | 3   |      |  |   | 3   |  
|                                 | Unrecognized net actuarial gain                     |               |   | 9   |      |  |   | 32  |  
|                                 | Unrecognized net transition obligation              |               |   | 8   |      |  |   | 15  |  
|                                 |                                                     |               |   |     |      | 
|                                 | Prepaid benefit cost at December 31                 |               | $ | 12  |      |  | $ | 13  |  
|                                 |                                                     |               |   |     |      | 

34



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|             |       |   |    |    |  |  |  |  | 
|------------ | ----- | - | -- | -- |  |  |  |  | 
|Year Ending  |       |   |    |   
|December 31, |       |   |    |   
|             |       |   |    |   
|2005         |       | $ | 9  |    |  |  |  | 
|2006         |       |   | 8  |    |  |  |  | 
|2007         |       |   | 8  |    |  |  |  | 
|2008         |       |   | 8  |    |  |  |  | 
|2009         |       |   | 7  |    |  |  |  | 
|2010-2014    |       |   | 35 |    |  |  |  | 
|             |       |   |    |    |  | 
|             | Total |   | $  | 75 |  |  |  |  | 
|             |       |   |    |    |  | 



|                                      |  |               |    |   |      |   |    |      |  |   |    |  
|------------------------------------- |  | ------------- | -- | - | ---- | - | -- | ---- |  | - | -- | -
|                                      |  | 2004          |    |   | 2003 |   |    | 2002 | 
|                                      |  |               |    |   |      |   |    |      | 
|                                      |  | (In millions) |   
|Interest cost                         |  | $             | 6  |   |      | $ | 7  |      |  | $ | 7  |  
|Expected return on plan assets        |  |               | (5 | ) |      |   | (4 | )    |  |   | (4 | )
|Amortization of net actuarial gain    |  |               | 2  |   |      |   | 1  |      |  |   |   |  
|Amortization of transition obligation |  |               | 8  |   |      |   | 8  |      |  |   | 8  |  
|                                      |  |               |    |   |      |   |    |      | 
|Net postretirement benefit cost       |  | $             | 11 |   |      | $ | 12 |      |  | $ | 11 |  
|                                      |  |               |    |   |      |   |    |      | 



|                                                            |                                       |           |  |      |      |  |  |      |  |  |  |      | 
|----------------------------------------------------------- | ------------------------------------- | --------- |  | ---- | ---- |  |  | ---- |  |  |  | ---- | 
|                                                            |                                       | 2004      |  |      | 2003 |  |  | 2002 | 
|                                                            |                                       |           |  |      |      |  |  |      | 
|                                                            |                                       | (Percent) | 
|Assumptions related to benefit obligations at September 30: |                                       |           |  |      |      |  |  |      |  |  |  |     
|                                                            | Discount rate                         |           |  | 5.75 |      |  |  | 6.00 |  |  |  |      | 
|Assumptions related to benefit costs at December 31:        |                                       |           |  |      |      |  |  |      |  |  |  |     
|                                                            | Discount rate                         |           |  | 6.00 |      |  |  | 6.75 |  |  |  | 7.25 | 
|                                                            | Expected return on plan
    assets(1) |           |  | 7.50 |      |  |  | 7.50 |  |  |  | 7.50 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The expected return on plan assets is a pre-tax rate (before a
    tax rate of 15 percent on postretirement benefits) that is
    primarily based on an expected risk-free investment return,
    adjusted for historical risk premiums and specific risk
    adjustments associated with our debt and equity securities.
    These expected returns were then weighted based on the target
    asset allocations of our investment portfolio.



|                               |                                               |               |   |    |      |  |   |    |  
|------------------------------ | --------------------------------------------- | ------------- | - | -- | ---- |  | - | -- | -
|                               |                                               | 2004          |   |    | 2003 | 
|                               |                                               |               |   |    |      | 
|                               |                                               | (In millions) |  
|One percentage point increase: |                                               |               |   |    |      |  |   |   
|                               | Aggregate of service cost and interest cost   |               | $ |   |      |  | $ |   |  
|                               | Accumulated postretirement benefit obligation |               | $ | 6  |      |  | $ | 8  |  
|One percentage point decrease: |                                               |               |   |    |      |  |   |   
|                               | Aggregate of service cost and interest cost   |               | $ |   |      |  | $ |   |  
|                               | Accumulated postretirement benefit obligation |               | $ | (5 | )    |  | $ | (7 | )

35



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##### Table of Contents



Other Postretirement
Plan Assets




|                  |       |           |    |     |        |  |    |     | 
|----------------- | ----- | --------- | -- | --- | ------ |  | -- | --- | 
|                  |       | Actual    |    |     | Actual | 
|Asset Category    |       | 2004      |    |     | 2003   | 
|                  |       |           |    |     |        | 
|                  |       | (Percent) |   
|Equity securities |       |           | 65 |     |        |  | 32 |    
|Debt securities   |       |           | 35 |     |        |  | 67 |    
|Other             |       |           |   |     |        |  | 1  |    
|                  |       |           |    |     |        | 
|                  | Total |           |    | 100 |        |  |    | 100 | 
|                  |       |           |    |     |        | 





8. Preferred Stock




9. Transactions with Affiliates


Cash Management Program.


Affiliate Receivables and Payables.






36



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##### Table of Contents



Other.




Affiliate Revenues and Expenses.






|                                                          |  |               |    |  |      |   |    |      |  |   |    | 
|--------------------------------------------------------- |  | ------------- | -- |  | ---- | - | -- | ---- |  | - | -- | 
|                                                          |  | Years Ended   |   
|                                                          |  | December 31,  |   
|                                                          |  |               |   
|                                                          |  | 2004          |    |  | 2003 |   |    | 2002 | 
|                                                          |  |               |    |  |      |   |    |      | 
|                                                          |  | (In millions) |   
|Revenues from affiliates                                  |  | $             | 18 |  |      | $ | 18 |      |  | $ | 46 | 
|Operation and maintenance expenses from affiliates        |  |               | 62 |  |      |   | 69 |      |  |   | 64 | 
|Reimbursement of operating expenses charged to affiliates |  |               | 14 |  |      |   | 13 |      |  |   | 12 | 

10. Transactions with Major Customer




|                                       |  |               |     |  |      |   |     |      |  |   |     | 
|-------------------------------------- |  | ------------- | --- |  | ---- | - | --- | ---- |  | - | --- | 
|                                       |  | 2004          |     |  | 2003 |   |     | 2002 | 
|                                       |  |               |     |  |      |   |     |      | 
|                                       |  | (In millions) |    
|Southern California Gas
    Company(1) |  | $             | 157 |  |      | $ | 154 |      |  | $ | 139 | 






|    |                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We have entered into an agreement with SoCal, subject to FERC
    approval, to extend 750 MMcf/d, effective September 1,
    2006, for terms of three to five years. Additionally, we have
    contracts with SoCal for 475 BBtu/d which expire in 2006
    and 82 BBtu/d which expire in 2005 and 2007.

11. Supplemental Cash Flow Information




|                                           |  |               |    |  |      |   |    |      |  |   |    | 
|------------------------------------------ |  | ------------- | -- |  | ---- | - | -- | ---- |  | - | -- | 
|                                           |  | 2004          |    |  | 2003 |   |    | 2002 | 
|                                           |  |               |    |  |      |   |    |      | 
|                                           |  | (In millions) |   
|Interest paid, net of capitalized interest |  | $             | 92 |  |      | $ | 74 |      |  | $ | 75 | 
|Income tax payments                        |  |               | 98 |  |      |   | 51 |      |  |   | 33 | 

37



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12. Supplemental Selected Quarterly Financial Information
(Unaudited)




|     |                         |                |   |     |         |  |   |              |   |  |             |     |  |       |   |     |  |  |   |     | 
|---- | ----------------------- | -------------- | - | --- | ------- |  | - | ------------ | - |  | ----------- | --- |  | ----- | - | --- |  |  | - | --- | 
|     |                         | Quarters Ended |  
|     |                         |                |  
|     |                         | March 31       |   |     | June 30 |  |   | September 30 |   |  | December 31 |     |  | Total |  
|     |                         |                |   |     |         |  |   |              |   |  |             |     |  |       |  
|     |                         | (In millions)  |  
|2004 |                         |                |   |     |         |  |   |              |   |  |             |     |  |       |   |     |  |  |   |    
|     | Operating revenues      |                | $ | 124 |         |  | $ | 130          |   |  | $           | 130 |  |       | $ | 124 |  |  | $ | 508 | 
|     | Operating income        |                |   | 60  |         |  |   | 69           |   |  |             | 59  |  |       |   | 54  |  |  |   | 242 | 
|     | Net income              |                |   | 34  |         |  |   | 32           |   |  |             | 32  |  |       |   | 20  |  |  |   | 118 | 
|2003 |                         |                |   |     |         |  |   |              |   |  |             |     |  |       |   |     |  |  |   |    
|     | Operating revenues      |                | $ | 132 |         |  | $ | 134          |   |  | $           | 132 |  |       | $ | 128 |  |  | $ | 526 | 
|     | Operating income (loss) |                |   | 73  |         |  |   | (87          | ) |  |             | 91  |  |       |   | 64  |  |  |   | 141 | 
|     | Net income (loss)       |                |   | 35  |         |  |   | (63          | ) |  |             | 44  |  |       |   | 31  |  |  |   | 47  | 

38



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














39



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##### Table of Contents



SCHEDULE II


EL PASO NATURAL GAS COMPANY





VALUATION AND QUALIFYING ACCOUNTS


Years Ended December 31, 2004, 2003 and 2002


(In millions)


|            |                                            |            |   |     |            |  |   |            |     |            |          |         |           |  |   |   |  |  |   |     | 
|----------- | ------------------------------------------ | ---------- | - | --- | ---------- |  | - | ---------- | --- | ---------- | -------- | ------- | --------- |  | - | - |  |  | - | --- | 
|            |                                            | Balance at |   |     | Charged to |  |   |            |     | Charged to |          | Balance |          
|            |                                            | Beginning  |   |     | Costs and  |  |   |            |     | Other      |          | at End  |          
|Description |                                            | of Period  |   |     | Expenses   |  |   | Deductions |     |            | Accounts |         | of Period | 
|            |                                            |            |   |     |            |  |   |            |     |            |          |         |           | 
|2004        |                                            |            |   |     |            |  |   |            |     |            |          |         |           |  |   |   |  |  |   |    
|            | Allowance for doubtful accounts            |            | $ | 18  |            |  | $ |           |     |            | $        |        |           |  | $ |  |  |  | $ | 18  | 
|            | Valuation allowance on deferred tax assets |            |   | 6   |            |  |   |           |     |            |          | (6      | )         |  |   |  |  |  |   |    | 
|            | Legal reserves                             |            |   | 541 |            |  |   |           |     |            |          | (538    | )(3)      |  |   |  |  |  |   | 3   | 
|            | Environmental reserves                     |            |   | 28  |            |  |   | 7          |     |            |          | (3      | )         |  |   |  |  |  |   | 32  | 
|            | Regulatory reserves                        |            |   | 12  |            |  |   |           |     |            |          | (12     | )(4)      |  |   |  |  |  |   |    | 
|2003        |                                            |            |   |     |            |  |   |            |     |            |          |         |           |  |   |   |  |  |   |    
|            | Allowance for doubtful accounts            |            | $ | 18  |            |  | $ |           |     |            | $        |        |           |  | $ |  |  |  | $ | 18  | 
|            | Valuation allowance on deferred tax assets |            |   | 6   |            |  |   |           |     |            |          |        |           |  |   |  |  |  |   | 6   | 
|            | Legal reserves                             |            |   | 415 |            |  |   | 136        | (1) |            |          | (10     | )(3)      |  |   |  |  |  |   | 541 | 
|            | Environmental reserves                     |            |   | 29  |            |  |   | 1          |     |            |          | (2      | )         |  |   |  |  |  |   | 28  | 
|            | Regulatory reserves                        |            |   | 13  |            |  |   | 40         | (4) |            |          | (41     | )(4)      |  |   |  |  |  |   | 12  | 
|2002        |                                            |            |   |     |            |  |   |            |     |            |          |         |           |  |   |   |  |  |   |    
|            | Allowance for doubtful accounts            |            | $ | 6   |            |  | $ | 12         |     |            | $        |        |           |  | $ |  |  |  | $ | 18  | 
|            | Valuation allowance on deferred tax assets |            |   |    |            |  |   | 6          |     |            |          |        |           |  |   |  |  |  |   | 6   | 
|            | Legal reserves                             |            |   | 2   |            |  |   | 423        | (2) |            |          | (10     | )         |  |   |  |  |  |   | 415 | 
|            | Environmental reserves                     |            |   | 29  |            |  |   |           |     |            |          |        |           |  |   |  |  |  |   | 29  | 
|            | Regulatory reserves                        |            |   | 19  |            |  |   | 46         | (4) |            |          | (52     | )(4)      |  |   |  |  |  |   | 13  | 






|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(1) | Reflects charges for the Western Energy Settlement.                                      
|   
|(2) | Includes a $412 million charge for the Western Energy
    Settlement.                    
|   
|(3) | Relates to payments made pursuant to the Western Energy
    Settlement.                  
|   
|(4) | Relates to amounts collected and paid for our risk sharing
    provisions with customers.

40



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
    AND FINANCIAL DISCLOSURE








|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures






Internal Control Over Financial Reporting




Access to Financial Application Programs and Data.


Changes in Internal Control over Financial Reporting


Changes in the Fourth Quarter 2004.


Changes in 2005.


41



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##### Table of Contents








ITEM 9B. OTHER INFORMATION







PART III







ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


Audit Fees




All Other Fees




Policy for Approval of Audit and Non-Audit Fees




42



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##### Table of Contents






PART IV





ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a) The following documents are filed as a part of this
report:






|                                  |                                                                                                                                                                      |      |    |    | 
|--------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | -- | -- | 
|                                  |                                                                                                                                                                      | Page
|                                  |                                                                                                                                                                      |     
|                                  | Consolidated Statements of Income                                                                                                                                    |      |    | 16 | 
|                                  | Consolidated Balance Sheets                                                                                                                                          |      |    | 17 | 
|                                  | Consolidated Statements of Cash Flows                                                                                                                                |      |    | 18 | 
|                                  | Consolidated Statements of
    Stockholders Equity                                                                                                                  |      |    | 19 | 
|                                  | Notes to Consolidated Financial
    Statements                                                                                                                       |      |    | 20 | 
|                                  | Report of Independent Registered Public
    Accounting Firm                                                                                                          |      |    | 39 | 
|2. Financial statement schedules.
|                                 
|                                  | Schedule II  Valuation and
    Qualifying Accounts                                                                                                                  |      |    | 40 | 
|                                 
|                                  | All other schedules are omitted because they are not applicable,
    or the required information is disclosed in the financial
    statements or accompanying notes. |      |    |    | 
|                                 
|3. Exhibit list                   |                                                                                                                                                                      |      | 44 |   

43



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EL PASO NATURAL GAS COMPANY





EXHIBIT LIST


December 31, 2004




|        |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 3.A  |  |             | Restated Certificate of Incorporation dated April 8, 2003
    (Exhibit 3.A to our 2003 Second Quarter Form 10-Q).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.B  |  |             | By-laws dated June 24, 2002 (Exhibit 3.B to our 2002
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | *4.A |  |             | Indenture dated as of January 1, 1992, between El Paso
    Natural Gas Company and Wilmington Trust Company (as successor
    to Citibank, N.A.), as Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *4.B |  |             | Indenture dated as of November 13, 1996, between
    El Paso Natural Gas Company and Wilmington Trust Company
    (as successor to JPMorgan Chase Bank, formerly known as The
    Chase Manhattan Bank), as Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4.C  |  |             | Indenture dated as of July 21, 2003, between El Paso
    Natural Gas Company and Wilmington Trust Company, as Trustee,
    (Exhibit 4.1 to our Form 8-K filed
    July 23, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10.A |  |             | Amended and Restated Credit Agreement dated as of
    November 23, 2004, among El Paso Corporation, ANR
    Pipeline Company, Colorado Interstate Gas Company, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, the several
    banks and other financial institutions from time to time parties
    thereto and JPMorgan Chase Bank, N.A., as administrative agent
    and as collateral agent (Exhibit 10.A to our Form 8-K
    filed November 29, 2004); Amended and Restated Subsidiary
    Guarantee Agreement dated as of November 23, 2004, made by
    each of the Subsidiary Guarantors in favor of JPMorgan Chase
    Bank, N.A., as Collateral Agent (Exhibit 10.C to our
    Form 8-K filed November 29, 2004).
|        | 10.B |  |             | Amended and Restated Security Agreement dated as of
    November 23, 2004, among El Paso Corporation, ANR
    Pipeline Company, Colorado Interstate Gas Company, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, the
    Subsidiary Grantors and certain other credit parties thereto and
    JPMorgan Chase Bank, N.A., not in its individual capacity, but
    solely as collateral agent for the Secured Parties and as the
    depository bank (Exhibit 10.B to our Form 8-K filed
    November 29, 2004).                                                                                                                                                                                                            

44



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|        |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 10.C |  |             | $3,000,000,000 Revolving Credit Agreement dated as of
    April 16, 2003 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company and ANR
    Pipeline Company, as Borrowers, the Lenders Party thereto, and
    JPMorgan Chase Bank, as Administrative Agent, ABN Amro Bank N.V.
    and Citicorp North America, Inc., as Co-Document Agents, Bank of
    America, N.A. and Credit Suisse First Boston, as Co-Syndication
    Agents, J.P. Morgan Securities Inc. and Citigroup Global Markets
    Inc., as Joint Bookrunners and Co-Lead Arrangers.
    (Exhibit 99.1 to El Paso Corporations Form 8-K
    filed April 18, 2003); First Amendment to the
    $3,000,000,000 Revolving Credit Agreement and Waiver dated as of
    March 15, 2004 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, ANR
    Pipeline Company and Colorado Interstate Gas Company, as
    Borrowers, the Lenders party thereto and JPMorgan Chase Bank, as
    Administrative Agent, ABN AMRO Bank N.V. and Citicorp North
    America, Inc., as Co-Documentation Agents, Bank of America, N.A.
    and Credit Suisse First Boston, as Co-Syndication Agents
    (Exhibit 10.A.1 to our 2003 First Quarter Form 10-Q);
    Second Waiver to the $3,000,000,000 Revolving Credit Agreement
    dated as of June 15, 2004 among El Paso Corporation,
    El Paso Natural Gas Company, Tennessee Gas Pipeline
    Company, ANR Pipeline Company and Colorado Interstate Gas
    Company, as Borrowers, the Lenders party thereto and JPMorgan
    Chase Bank, as Administrative Agent, ABN AMRO Bank N.V. and
    Citicorp North America, Inc., as Co-Documentation Agents, Bank
    of America, N.A. and Credit Suisse First Boston, as
    Co-Syndication Agents (Exhibit 10.A.2 to our 2003 Second
    Quarter Form 10-Q); Second Amendment to the $3,000,000,000
    Revolving Credit Agreement and Third Waiver dated as of
    August 6, 2004 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, ANR
    Pipeline Company and Colorado Interstate Gas Company, as
    Borrowers, the Lenders party thereto and JPMorgan Chase Bank, as
    Administrative Agent, ABN AMRO Bank N.V. and Citicorp North
    America, Inc., as Co-Documentation Agents, Bank of America, N.A.
    and Credit Suisse First Boston, as Co-Syndication Agents.
    (Exhibit 99.B to our Form 8-K filed August 10,
    2004).
|        | 10.D |  |             | $1,000,000,000 Amended and Restated 3-Year Revolving Credit
    Agreement dated as of April 16, 2003 among El Paso
    Corporation, El Paso Natural Gas Company and Tennessee Gas
    Pipeline Company, as Borrowers, The Lenders Party thereto, and
    JPMorgan Chase Bank, as Administrative Agent, ABN Amro Bank N.V.
    and Citicorp North America, Inc., as Co-Document Agents, Bank of
    America, N.A., as Syndication Agent, J.P. Morgan Securities Inc.
    and Citigroup Global Markets Inc., as Joint Bookrunners and
    Co-Lead Arrangers. (Exhibit 99.2 to El Paso
    Corporations Form 8-K filed April 18, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10.E |  |             | Security and Intercreditor Agreement dated as of April 16,
    2003 among El Paso Corporation, the persons referred to therein
    as Pipeline Company Borrowers, the persons referred to therein
    as Grantors, each of the Representative Agents, JPMorgan Chase
    Bank, as Credit Agreement Administrative Agent and JPMorgan
    Chase Bank, as Collateral Agent, Intercreditor Agent, and
    Depository Bank. (Exhibit 99.3 to El Paso
    Corporations Form 8-K filed April 18, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

45



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|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.F  |  |             | Master Settlement Agreement dated as of June 24, 2003, by
    and between, on the one hand, El Paso Corporation, El Paso
    Natural Gas Company, and El Paso Merchant Energy, L.P.; and, on
    the other hand, the Attorney General of the State of California,
    the Governor of the State of California, the California Public
    Utilities Commission, the California Department of Water
    Resources, the California Energy Oversight Board, the Attorney
    General of the State of Washington, the Attorney General of the
    State of Oregon, the Attorney General of the State of Nevada,
    Pacific Gas & Electric Company, Southern California Edison
    Company, the City of Los Angeles, the City of Long Beach, and
    classes consisting of all individuals and entities in California
    that purchased natural gas and/or electricity for use and not
    for resale or generation of electricity for the purpose of
    resale, between September 1, 1996 and March 20,
    2003, inclusive, represented by class representatives
    Continental Forge Company, Andrew Berg, Andrea Berg, Gerald J.
    Marcil, United Church Retirement Homes of Long Beach, Inc.,
    doing business as Plymouth West, Long Beach Brethren Manor,
    Robert Lamond, Douglas Welch, Valerie Welch, William Patrick
    Bower, Thomas L. French, Frank Stella, Kathleen Stella, John
    Clement Molony, SierraPine, Ltd., John Frazee and Jennifer
    Frazee, John W.H.K. Phillip, and Cruz Bustamante (Exhibit 10.HH
    to our second quarter 2003 Form 10-Q).
|        | 10.G  |  |             | Joint Settlement Agreement submitted and entered into by El Paso
    Natural Gas Company, El Paso Merchant Energy Company, El Paso
    Merchant Energy-Gas, L.P., the Public Utilities Commission of
    the State of California, Pacific Gas & Electric Company,
    Southern California Edison Company and the City of Los Angeles
    (Exhibit 10.II to our 2003 second quarter Form 10-Q).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 21    |  |             | Omitted pursuant to the reduced disclosure format permitted by
    General Instruction I to Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | *31.A |  |             | Certification of Chief Executive Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *31.B |  |             | Certification of Chief Financial Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *32.A |  |             | Certification of Chief Executive Officer pursuant to 18 U.S.C.
    sec. 1350 as adopted pursuant to sec. 906 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | *32.B |  |             | Certification of Chief Financial Officer pursuant to 18 U.S.C.
    sec. 1350 as adopted pursuant to sec. 906 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Undertaking




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SIGNATURES






| |                              
| | -----------------------------
| | EL PASO NATURAL GAS COMPANY  
|
| | By /s/ JOHN W. SOMERHALDER II
| |                              
| | John W. Somerhalder II       
| | Chairman of the Board        



|                                                       |  |                                                                                                                         |  |               
|------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                              |  | Title                                                                                                                   |  | Date          
|                                                       |  |                                                                                                                         |  |               
|/s/ JOHN W. SOMERHALDER II(John W.
    Somerhalder II) |  | Chairman of the Board and Director (Principal Executive Officer)                                                        |  | March 29, 2005
|                                                      
|/s/ JAMES J. CLEARY(James
    J. Cleary)               |  | President and Director                                                                                                  |  | March 29, 2005
|                                                      
|/s/ GREG G. GRUBER(Greg G.
    Gruber)                 |  | Senior Vice President, Chief Financial Officer, Treasurer and
    Director (Principal Financial and Accounting Officer) |  | March 29, 2005

47



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##### Table of Contents



EL PASO NATURAL GAS COMPANY


EXHIBIT INDEX


December 31, 2004




|        |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ---- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 3.A  |  |             | Restated Certificate of Incorporation dated April 8, 2003
    (Exhibit 3.A to our 2003 Second Quarter Form 10-Q).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.B  |  |             | By-laws dated June 24, 2002 (Exhibit 3.B to our 2002
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | *4.A |  |             | Indenture dated as of January 1, 1992, between El Paso
    Natural Gas Company and Wilmington Trust Company (as successor
    to Citibank, N.A.), as Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *4.B |  |             | Indenture dated as of November 13, 1996, between
    El Paso Natural Gas Company and Wilmington Trust Company
    (as successor to JPMorgan Chase Bank, formerly known as The
    Chase Manhattan Bank), as Trustee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4.C  |  |             | Indenture dated as of July 21, 2003, between El Paso
    Natural Gas Company and Wilmington Trust Company, as Trustee,
    (Exhibit 4.1 to our Form 8-K filed
    July 23, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10.A |  |             | Amended and Restated Credit Agreement dated as of
    November 23, 2004, among El Paso Corporation, ANR
    Pipeline Company, Colorado Interstate Gas Company, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, the several
    banks and other financial institutions from time to time parties
    thereto and JPMorgan Chase Bank, N.A., as administrative agent
    and as collateral agent (Exhibit 10.A to our Form 8-K
    filed November 29, 2004); Amended and Restated Subsidiary
    Guarantee Agreement dated as of November 23, 2004, made by
    each of the Subsidiary Guarantors in favor of JPMorgan Chase
    Bank, N.A., as Collateral Agent (Exhibit 10.C to our
    Form 8-K filed November 29, 2004).
|        | 10.B |  |             | Amended and Restated Security Agreement dated as of
    November 23, 2004, among El Paso Corporation, ANR
    Pipeline Company, Colorado Interstate Gas Company, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, the
    Subsidiary Grantors and certain other credit parties thereto and
    JPMorgan Chase Bank, N.A., not in its individual capacity, but
    solely as collateral agent for the Secured Parties and as the
    depository bank (Exhibit 10.B to our Form 8-K filed
    November 29, 2004).                                                                                                                                                                                                            



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##### Table of Contents



|        |      |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | ---- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |            
|Number  |      |  | Description
|        |      |  |            
|        | 10.C |  |             | $3,000,000,000 Revolving Credit Agreement dated as of
    April 16, 2003 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company and ANR
    Pipeline Company, as Borrowers, the Lenders Party thereto, and
    JPMorgan Chase Bank, as Administrative Agent, ABN Amro Bank N.V.
    and Citicorp North America, Inc., as Co-Document Agents, Bank of
    America, N.A. and Credit Suisse First Boston, as Co-Syndication
    Agents, J.P. Morgan Securities Inc. and Citigroup Global Markets
    Inc., as Joint Bookrunners and Co-Lead Arrangers.
    (Exhibit 99.1 to El Paso Corporations Form 8-K
    filed April 18, 2003); First Amendment to the
    $3,000,000,000 Revolving Credit Agreement and Waiver dated as of
    March 15, 2004 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, ANR
    Pipeline Company and Colorado Interstate Gas Company, as
    Borrowers, the Lenders party thereto and JPMorgan Chase Bank, as
    Administrative Agent, ABN AMRO Bank N.V. and Citicorp North
    America, Inc., as Co-Documentation Agents, Bank of America, N.A.
    and Credit Suisse First Boston, as Co-Syndication Agents
    (Exhibit 10.A.1 to our 2003 First Quarter Form 10-Q);
    Second Waiver to the $3,000,000,000 Revolving Credit Agreement
    dated as of June 15, 2004 among El Paso Corporation,
    El Paso Natural Gas Company, Tennessee Gas Pipeline
    Company, ANR Pipeline Company and Colorado Interstate Gas
    Company, as Borrowers, the Lenders party thereto and JPMorgan
    Chase Bank, as Administrative Agent, ABN AMRO Bank N.V. and
    Citicorp North America, Inc., as Co-Documentation Agents, Bank
    of America, N.A. and Credit Suisse First Boston, as
    Co-Syndication Agents (Exhibit 10.A.2 to our 2003 Second
    Quarter Form 10-Q); Second Amendment to the $3,000,000,000
    Revolving Credit Agreement and Third Waiver dated as of
    August 6, 2004 among El Paso Corporation, El Paso
    Natural Gas Company, Tennessee Gas Pipeline Company, ANR
    Pipeline Company and Colorado Interstate Gas Company, as
    Borrowers, the Lenders party thereto and JPMorgan Chase Bank, as
    Administrative Agent, ABN AMRO Bank N.V. and Citicorp North
    America, Inc., as Co-Documentation Agents, Bank of America, N.A.
    and Credit Suisse First Boston, as Co-Syndication Agents.
    (Exhibit 99.B to our Form 8-K filed August 10,
    2004).
|        | 10.D |  |             | $1,000,000,000 Amended and Restated 3-Year Revolving Credit
    Agreement dated as of April 16, 2003 among El Paso
    Corporation, El Paso Natural Gas Company and Tennessee Gas
    Pipeline Company, as Borrowers, The Lenders Party thereto, and
    JPMorgan Chase Bank, as Administrative Agent, ABN Amro Bank N.V.
    and Citicorp North America, Inc., as Co-Document Agents, Bank of
    America, N.A., as Syndication Agent, J.P. Morgan Securities Inc.
    and Citigroup Global Markets Inc., as Joint Bookrunners and
    Co-Lead Arrangers. (Exhibit 99.2 to El Paso
    Corporations Form 8-K filed April 18, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10.E |  |             | Security and Intercreditor Agreement dated as of April 16,
    2003 among El Paso Corporation, the persons referred to therein
    as Pipeline Company Borrowers, the persons referred to therein
    as Grantors, each of the Representative Agents, JPMorgan Chase
    Bank, as Credit Agreement Administrative Agent and JPMorgan
    Chase Bank, as Collateral Agent, Intercreditor Agent, and
    Depository Bank. (Exhibit 99.3 to El Paso
    Corporations Form 8-K filed April 18, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



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##### Table of Contents



|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | ----- |  | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |            
|Number  |       |  | Description
|        |       |  |            
|        | 10.F  |  |             | Master Settlement Agreement dated as of June 24, 2003, by
    and between, on the one hand, El Paso Corporation, El Paso
    Natural Gas Company, and El Paso Merchant Energy, L.P.; and, on
    the other hand, the Attorney General of the State of California,
    the Governor of the State of California, the California Public
    Utilities Commission, the California Department of Water
    Resources, the California Energy Oversight Board, the Attorney
    General of the State of Washington, the Attorney General of the
    State of Oregon, the Attorney General of the State of Nevada,
    Pacific Gas & Electric Company, Southern California Edison
    Company, the City of Los Angeles, the City of Long Beach, and
    classes consisting of all individuals and entities in California
    that purchased natural gas and/or electricity for use and not
    for resale or generation of electricity for the purpose of
    resale, between September 1, 1996 and March 20,
    2003, inclusive, represented by class representatives
    Continental Forge Company, Andrew Berg, Andrea Berg, Gerald J.
    Marcil, United Church Retirement Homes of Long Beach, Inc.,
    doing business as Plymouth West, Long Beach Brethren Manor,
    Robert Lamond, Douglas Welch, Valerie Welch, William Patrick
    Bower, Thomas L. French, Frank Stella, Kathleen Stella, John
    Clement Molony, SierraPine, Ltd., John Frazee and Jennifer
    Frazee, John W.H.K. Phillip, and Cruz Bustamante (Exhibit 10.HH
    to our second quarter 2003 Form 10-Q).
|        | 10.G  |  |             | Joint Settlement Agreement submitted and entered into by El Paso
    Natural Gas Company, El Paso Merchant Energy Company, El Paso
    Merchant Energy-Gas, L.P., the Public Utilities Commission of
    the State of California, Pacific Gas & Electric Company,
    Southern California Edison Company and the City of Los Angeles
    (Exhibit 10.II to our 2003 second quarter Form 10-Q).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 21    |  |             | Omitted pursuant to the reduced disclosure format permitted by
    General Instruction I to Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | *31.A |  |             | Certification of Chief Executive Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *31.B |  |             | Certification of Chief Financial Officer pursuant to
    sec. 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | *32.A |  |             | Certification of Chief Executive Officer pursuant to 18 U.S.C.
    sec. 1350 as adopted pursuant to sec. 906 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | *32.B |  |             | Certification of Chief Financial Officer pursuant to 18 U.S.C.
    sec. 1350 as adopted pursuant to sec. 906 of the Sarbanes-Oxley
    Act of 2002.